Nelson, the former mayor of a Louisiana town, appealed his corruption-related
offenses.The panel affirmed the
conviction but vacated his sentence and remanded for resentencing.

Before deciding to go to trial, Nelson entered into a plea
agreement with stipulated facts and a waiver that allowed the Government to use
the factual stipulation against him if he failed to plead guilty.After signing the plea agreement, Nelson
switched attorneys and decided not to plead guilty.At trial, the district court allowed the
factual stipulation to be admitted as evidence and allowed Nelson’s former attorney
to testify as to the circumstances of signing the plea agreement.The Government argued that the former
attorney’s testimony was necessary for them to show that the plea agreement was
entered into knowingly and voluntarily.Talk
about prejudicial, right?

The panel affirmed the admission of the factual stipulation
because Nelson “validly waived the exclusionary provisions of the
plea-statement rules” (Federal Rule of Evidence 410).The panel thought the former attorney’s
testimony that Nelson understood and agreed with the plea agreement and only
signed it after a lengthy discussion with his attorney, however, went too far
and was protected by the attorney-client privilege.The error was harmless, though, because it
was cumulative of the factual stipulation.The panel glosses over the fact that the factual stipulation was
introduced into evidence through the former attorney, reasoning that it would
have gone before the jury whether or not the former attorney testified.

The panel also affirmed the district court’s refusal to
instruct the jury on the entrapment defense since Nelson did not present prima
facie evidence that he lacked predisposition to the offense.Specifically, Nelson did not present “a
plausible innocent explanation for accepting the money and other gifts offered
to him” by a person who was not an FBI undercover agent. Also, the district court did not err by
allowing hearsay as a co-conspirator statement because the witness and Nelson
were at least co-conspirators in that they engaged in a common scheme to
recruit a certain business (Cifer) to their towns, even if that joint venture
was not necessarily unlawful.

With regard to the sentencing loss calculation, the district
court calculated the bribery amount at $6,382,000.The panel found that the district court
erroneously valued the loss related to a letter Nelson wrote to the EPA to
assist Cifer in obtaining a grant and a letter he wrote to private investors
expressing his support of Cifer.The
district court calculated the loss as $4 million and $2 million,
respectively.The panel disagreed with
the methodology of calculating the loss to be the total possible value of the
grants based on Nelson’s written support of Cifer to receive those grants.“A defendant’s false statement in seeking
government benefits is insufficient to render him accountable for all benefits
received or intended to be received.”The
panel also pointed out that “a defendant should not be held accountable for the
total amount of [government] benefits obtained, when some portion of that benefit
would have been obtained absent the fraudulent conduct,” and that “the
expectation of receiving a ‘substantial’ amount of money is insufficiently specific
to base a calculation of intended loss.” The panel remanded to the district court to
determine the bribery amount related to those two letters but suggests that, if
the amount of loss cannot reasonably be determined, that it may be more appropriate
to use “the gain that resulted from the offense” in accordance with the § 2B1.1
commentary—e.g.,
the amount Nelson received for writing the EPA letter: $10,000. The panel found that the district court had
sufficient evidence, however, to value Nelson’s expected benefit from the
kickback scheme at $250,000.

Undisguised Transfers from Operating Accounts to Investment Accounts Not Proof of Concealment of Money Laundering or “Sophisticated Means” for § 2B1.1(b)(9)(C)

Valdez, a psychiatrist, appealed many aspects of his trial
and sentence in his money laundering and health care fraud case.For the money laundering charge, 18 U.S.C. §
1956(a)(1), the Government alleged the two alternative ways to violate that
statute: to promote or further illegal actions, and to conceal or disguise the nature
or source of the illegal proceeds.The
panel found there was insufficient evidence of money laundering by concealment but
sufficient evidence to sustain the conviction based on promotion of unlawful
activity.

The prove money laundering by concealment, the government
relied on Valdez’s transfers of funds from operating accounts to investment
accounts and on his property purchases.All transfers and purchases were done openly in Valdez’s name.“None of the transactions pointed to by the
government show a specific intent to conceal the nature, location, source or
ownership of the funds used.Valdez did
not use false names, third parties, or any particularly complicated financial maneuvers,
which are usual hallmarks of an intent to conceal.”

Nonetheless, the conviction stands because there was
sufficient evidence that Valdez made irregular payments and “loans” to his
employees with the fraudulently-obtained money satisfying the promotion prong
of money laundering.The district court
did not give the jury a specific unanimity charge regarding the money
laundering count, which would have instructed them to unanimously agree that
Valdez was guilty of money laundering based on promotion, concealment, or
both.Valdez, however, did not object to
the instruction, and panel held that Fifth Circuit precedent forecloses Valdez’s
argument that this constituted plain error.See United States v. Alford,
999 F.2d 818, 824 (5th Cir. 1993).

As for Valdez’s sentencing arguments, the panel found that
Valdez’s transfers from operating accounts to investment accounts did not
constitute “sophisticated means” to conceal the offense under U.S.S.G. §
2B1.1(b)(9)(C).The panel also found
that the district court erred by calculating the intended loss based on the
value of the fraudulent claims filed without considering Valdez’s evidence in
the record that he never expected full reimbursement for the fraudulent claims
filed.Despite these errors, the panel
found that the 300-month sentence was within the adjusted Guidelines range and
that the district court would have imposed that sentence regardless of the adjusted
range.The errors were harmless.The panel also affirmed the abuse of trust
enhancement under § 3B1.3, the mass-marketing enhancement under § 2B1.1(b)(2)(A)(ii),
and the application of the vulnerable victims enhancement under § 3A1.1(b)(1) since
there was sufficient evidence that some patients were harmed by Valdez’s
conduct.

Tuesday, October 22, 2013

Texas Injury to a Child is a Career Offender COV under Modified Categorical Approach

The panel finds that Injury to a Child in violation of Texas
Penal Code § 22.04(a) is a “crime of violence” under the U.S.S.G. § 4B1.2(a)(2)
residual clause, so Nieto was properly sentenced as a career offender.The panel used the modified categorical
approach to determine whether Nieto’s crime involved conduct that presented a
serious potential risk of physical injury to another.Acknowledging that a prior conviction under §
22.04 does not constitute a “crime of violence” under U.S.S.G. § 2L1.2 because
that definition requires force to be an element of the statute of conviction,
the panel found that intentionally or knowingly causing a child bodily injury
by an act—which is
what Nieto’s indictment essentially charged—involves conduct that presents a serious potential
risk of injury to another.

The panel also held that the evidence was sufficient to
convict the Barrio Azteca defendants on RICO substantive and conspiracy charges
as well as conspiracy to possess with intent to distribute controlled
substances, and that the district court did not err by “conducting ex parte
interviews with the acquiescence of counsel to evaluate intrinsic influence[,]”
namely jurors’ anxiety about the case and their safety concerns.The district court dismissed without
objection the one juror who had the extrinsic influence of her husband
contacting a friend who then contacted the case officer out of concern for the
juror’s safety.

Monday, October 21, 2013

Error to Increase Sentence Based on Defendant’s Status as a Police Officer (Impermissible Socioeconomic Factor)

Chandler pleaded guilty to engaging in a child exploitation
enterprise and was sentenced to 547 months of imprisonment after the district
court varied upward from the recommended Guidelines range by 127 months.While he was a police officer, Chandler
joined an online bulletin board and posted child pornography.The panel found that the “district court
relied extensively on the fact that Chandler was a police officer at the time
of the offense,” even though there was “no evidence in the record that he used
or exploited his position as a police officer, or used any knowledge or skills
he gained from that position, to commit the offense or attempt to hide it.”Consequently, the court’s comments “could be
interpreted to cross the line into impermissible reliance on Chandler’s
socioeconomic status as a police officer,” which, “standing alone, is not a
justifiable reason to increase a sentence.”Even on plain error review, the panel vacated Chandler’s sentence and
remanded for re-sentencing.A reminder
that the “should have known better” or the “trusted community figure” factor
does not warrant a higher sentence on its own.

Tuesday, October 15, 2013

Appeal Waiver in Sentencing Agreement Enforceable

The Fifth Circuit joined its sister circuits in holding that
“waivers in sentencing agreements are enforceable just as waivers in plea
agreements are enforceable.”

In this case, the Government filed a sentencing enhancement
notice under 21 U.S.C. § 851(a) for Walters’ two prior felony drug
convictions.As a result, Walters was
exposed to a mandatory sentence of life imprisonment.After the jury found Walters guilty of
conspiracy and substantive drug offenses as well as unlawful use of
communications, Walters filed motions for a new trial and to arrest judgment.Walters subsequently entered into a
sentencing agreement with the Government in which he agreed to withdraw the
pending motions and waive his right to appeal the conviction and sentence in
exchange for the Government’s dismissal of the § 851(a) sentencing
enhancement.As a result, he faced a mandatory
minimum sentence of twenty years in prison to which he was sentenced.

Walters sought to challenge the participation of alternate
jurors in jury deliberations on appeal, but the panel held that his appeal waiver
was knowing and voluntary even though the district court did not address the
waiver in open court at sentencing, noting that the requirement that the
district court discuss an appeal waiver before accepting a guilty plea does not
apply to a post-verdict agreement such as Walters’.The panel concluded:

As a result of the sentencing agreement,
Walters voluntarily chose the guarantee that he would not face a mandatory life
term in prison over the uncertainty of pursuing an appeal.He may not now avoid the consequences of his
agreement after having received the benefit of his bargain.

Wednesday, October 09, 2013

Conspiracy to Possess Drugs on Aircraft With Intent to Distribute Applies Extraterritorially

Appellants challenged the application of 21 U.S.C. § 963 to
these circumstances: they hired U.S. citizens in the United States to fly to
South America, obtain drugs, and then fly with those drugs to the United
Kingdom.The panel finds that 21 U.S.C.
§ 959(b)(2), which prohibits the possession of illicit substances with intent
to distribute either by a U.S. citizen on an aircraft or on an aircraft
registered in the United States, applies extraterritorially since that was
Congress’s intent and such application is constitutional.

The panel reaches this decision by analyzing the statutory
language, justifications for overcoming the presumption against extraterritorial
application of U.S. statutes in the context of drug smuggling laws, and
international law principles including that a country can supervise and
regulate the acts of its citizens outside of its territories and the protective
theory that a country can enforce criminal laws wherever if the act threatens
the country’s security or directly interferes with its governmental
operations.The panel also concluded
that Congress had the authority to enact § 959(b) with extraterritorial
application under the Necessary and Proper Clause as necessary to implement its
treaty-making power.That said, the
panel seemed comfortable with its decision because the facts of this case
involved actions taken in the United States (coordination, hiring of mules, and
ultimate receipt of money) that resulted in the drugs being possessed by U.S.
citizens on a flight from South America to the United Kingdom.Perhaps
a case without that extra hook—which is not statutorily required—would have a
different result or at least cause a court more pause.

Tuesday, October 08, 2013

The panel found that the U.S.S.G. § 2K2.1(b)(6)(B) 4-level
enhancement—“[i]f
the defendant used or possessed any firearm . . . in connection with another felony offense”—applies to a drug trafficking offense if a
disassembled firearm is found in close proximity to drugs, as per the application
note.The PSR described the firearm
being found in the bedroom with the drug-manufacturing materials and
paraphernalia, and Alcantar didn’t present any evidence rebutting the proximity of the firearm.Instead, Alcantar provided evidence that the
firearm was disassembled, that he didn’t know how to assemble it, and that he
didn’t have any ammunition for it.The
panel was unconvinced, basically saying that the Guideline explanation of “in
connection with” doesn’t require that the firearm actually be used in
furtherance of the offense.Close
proximity is sufficient, and the district court didn’t err in applying the
enhancement.

Alcantar also argued that 18 U.S.C. § 922(g)(1), convicted
felon in possession of a firearm, is unconstitutional facially and as-applied because
it exceeds Congress’s Commerce Clause authority.He recognized that this argument is
foreclosed by Fifth Circuit precedent but argued that the Supreme Court’s decision
in National Federation of Independent
Business v. Sebelius, 132 S. Ct. 2566, 2587 (2012), overrules that
precedent.The panel disagreed since National Federation involved Obamacare
and not § 922(g)(1).Still, food for
thought.

Monday, October 07, 2013

Both Powell and Akin went to trial on charges of conspiracy
to possess crack cocaine with intent to distribute and possession with intent to
distribute.The crack cocaine was
discovered pursuant to a legitimate traffic stop and tip from an
informant.Akin made inculpatory
statements after her arrest that the Government introduced at trial through the
testimony of officers.Akin did not testify,
but Powell did.During cross-examination
of Powell, the prosecutor repeatedly asked Powell to explain Akin’s inculpatory
statements.

The panel held that the introduction of Akin’s statements
did not violate Bruton v. United States,
391 U.S. 123 (1968), because the statements “did not clearly refer to [Powell]
and could only be linked [to him] through additional evidentiary material.”The statements only focused on Akin’s
personal actions and personal knowledge about the crack cocaine.However, the panel held that the use of Akin’s
statements against Powell through cross-examination violated Bruton and the Confrontation Clause
because Akin did not testify, so Powell could not confront the witness against
him.The cross-examination “drew the
jury’s attention to Akin’s statements and used her statements against” Powell
thereby “significantly increas[ing] the danger of improper use” of the statements.The Bruton
error did not mandate reversal, though, because it was harmless given the
weight of other evidence against Powell.

The panel also analyzed Powell’s and Akin’s suppression
arguments but held that the duration of the stop did not violate Terry because officers had reasonable
suspicion that Powell and Akin were transporting cocaine (based on the
informant’s tip that contained very specific details) and that the intrusive
search of the vehicle was based on probable cause (also the informant’s tip
that was gradually corroborated by the officers’ investigation).

Lastly, the panel affirmed Powell’s sentence as reasonable
and also the U.S.S.G § 3B1.4 use of a minor enhancement.The panel reiterated that the test of whether
the enhancement applies is purpose-driven: whether the defendant took “‘some affirmative action to involve the
minor in the offense’” and “‘used the minor to avoid detection.’”(quoting United
States v. Mata, 624 F.3d 170, 175 (5th Cir. 2010)).Here, Powell decided to take the minor on a
previously-planned drug trafficking trip.The panel recognized a plausible explanation for the minor’s presence in
the vehicle other than to avoid detection: both parents were young, in the
vehicle, and without means for childcare.However, Powell told the traffic officers that he was returning from
picking up his child, which the panel took to “demonstrate use of a minor to
avoid detection and provide the additional circumstantial evidence necessary
under Mata” for the enhancement.